Reciprocity Income Subtraction

If your employer withheld Minnesota tax on income covered under reciprocity, you may request a refund of the tax withheld. To do so, you may claim a subtraction from Minnesota taxable income.

Minnesota has income tax reciprocity agreements with Michigan and North Dakota. For details, see Reciprocity.

To qualify, all of these must be true:

• You are a Michigan or North Dakota resident who filed an income tax return in your home state.
• Your only Minnesota source income was personal service income covered under reciprocity. Personal service income includes wages, salaries, tips, commissions, fees, and bonuses.
• Your employer withheld Minnesota income tax from your personal service income.

To claim the subtraction, file a Minnesota income tax return (Form M1, Individual Income Tax) while following these steps:

1. Complete Schedule M1M, Income Additions and Subtractions.
2. Complete Schedule M1W, Minnesota Income Tax Withheld, to report your Minnesota tax withheld.
3. Enclose both schedules and a copy of your home state’s tax return when you file Form M1.

If you are married and file a joint return, you must include both you and your spouse’s names, Social Security Numbers, and dates of birth on all forms – even if only one spouse works in Minnesota.

Minnesota-Source Income Other than Personal Service Income

This income is not covered under reciprocity and is taxable to Minnesota. If this income meets the minimum filing requirement ($13,825 for 2023), you must file Form M1 and Schedule M1NR, Part-Year Residents/Nonresidents. For a list of income taxable to Minnesota, see How Nonresident Income is Taxed by Minnesota.

Note: When completing column B of Schedule M1NR, do not include your personal service income covered by reciprocity.

I Do Not Want My Employer to Withhold Minnesota Tax

Provide your employer a completed Form MWR, Reciprocity Exemption/Affidavit of Residency, each year.